Exercise 7-7 Blue Company reports the following financial information before adj

Question

Exercise 7-7 Blue Company reports the following financial information before adjustments. Dr. Accounts Receivable Allowance for Doubtful Accounts Sales Revenue (all on credit) Sales Returns and Allowances $168,900 $3,200 849,300 50,440 Prepare the journal entry to record bad debt expense assuming Blue Company estimates bad debts at (a) 4% of accounts receivable and (b) 4% of accounts receivable but Allowance for Doubtful Accounts had a $1,550 debit balance. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) No. Account Titles and Explanation Debit Credit SHOW LIST OF ACCOUNTS LINK TO TEXT

Explanation / Answer

a Bad debts expense 3556 =(168900*4%)-3200        Allowance for Doubtful accounts 3556 b Bad debts expense 8306 =(168900*4%)+1550        Allowance for Doubtful accounts 8306 7-5 Bad debts expense 20116 =(386600*6%)-3080        Allowance for Doubtful accounts 20116

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